CDI closes $2.75bn Peninsula Pacific Entertainment acquisition

| By Robert Fletcher
Churchill Downs Incorporated (CDI) has completed its purchase of substantially all assets of Peninsula Pacific Entertainment (P2E) for a total consideration of $2.75bn (£2.39bn/€2.78bn).

The acquisition, agreed in February of this year, includes all P2E’s assets and operations in Virginia, New York and Sioux City, Iowa.

Completion follows the receipt of customary licensing approvals from the Virginia Racing Commission, the New York State Gaming Commission and the Iowa Racing and Gaming Commission.

“Today marks a significant moment in the evolution of Churchill Downs Incorporated,” CDI chief executive Bill Carstanjen said. “This transaction meaningfully expands our geographic footprint to Iowa, New York and Virginia, introducing a very unique set of assets and attractive organic growth opportunities to our company.

“We are excited to welcome the teams from each of these well-established properties into Churchill Downs Incorporated.”

CDI will take ownership of the Colonial Downs Racetrack in Virginia, as well as six Rosie’s Gaming Emporium historical horse racing machine (HRM) sites across the state, including locations in Collinsville, Dumfries, Hampton, New Kent, Richmond and Vinton.

In New York, CDI will assume control of the Del Lago Resort & Casino, a 96,000sq ft casino with approximately 1,700 slot machines and 80 table games, as well as a sportsbook area, a 205-room hotel, nine restaurants and bar areas, 758 covered parking spaces, a 2,400-seat entertainment venue and an outdoor event venue.

The deal also covers the Hard Rock Hotel & Casino in Sioux City, Iowa, a 45,000sq ft casino with 639 slot machines with 20 table games, a Hard Rock-branded sportsbook, a 54-room hotel, 1,511 parking spaces and two live entertainment venues.

In addition, the P2E acquisition includes certain development rights, such as the opportunity to develop up to five new HRM entertainment venues in Virginia with collectively up to approximately 2,300 additional HRMs.

CDI may also build a new HRM entertainment venue with up to 1,800 HRMs in Dumfries, Virginia, with the initial phase expected to open in 2023. CDI will also have the rights to develop a new HRM entertainment location with up to 150 HRMs in Emporia, Virginia, the first phase of which is due to open next year.

In addition, CDI will be able to pick up P2E’s ongoing efforts, in partnership with Urban One, to develop ONE Casino + Resort, a $565.0m destination casino in Richmond, Virginia.

Completion of the acquisition comes after CDI last week reported record adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) in its third quarter. EBITDA for the period reached $163.2m, up 4.6% year-on-year.

However, revenue was 2.5% lower year-on-year at $383.1m, while net profit amounted to $57.0m, down 7.2% on last year.

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